Plunge of oil demand limits storage capacity

The drop in oil demand by refiners at local level and the exports limited to a minimum at global level due to the coronavirus pandemic, pushed storage capacity to the limit in the producing provinces
Télam Monday, 27 April 2020

The drop in oil demand by refiners at local level and the exports limited to a minimum at the global level, after the stop of activity due to the coronavirus pandemic, pushed storage capacity to the limit in the producing provinces, sector officials said.

The Minister of Hydrocarbons of Chubut, Martín Cerdá, admitted his concern about the "little remaining crude storage capacity" in the TerMaP (Terminales Marítimas Patagónicas) plants located north of Comodoro Rivadavia, where the reception service is carried out -storage and dispatch of oil to ships-, due to the decrease in demand caused by the drop in prices.

The oil production of YPF, Pan American Energy, Sipetrol, Total Austral, Dapetrol, Shell Capsa, Vintage Oil Argentina and CAPSA, among others, is deposited on that tank beach for subsequent shipment.

"In the absence of consumption due to the drop in demand, the oil is not withdrawn from the terminal and this causes the reception capacity to shrink more and more, although some vessels are still loading and that alleviates," explained the minister in dialogue with the Télam agency, and described the situation that the sector is going through as "worrying."

He also clarified that "despite the fall in the international price of oil, production was not stopped, which also responds to geological and extraction issues, since if it is stopped, distortions are caused in the fields that may lead to a collapse."

The situation in the province of Tierra del Fuego is "complex, leading to the paralysis of several wells," admitted the provincial Secretary of Energy, Moisés Solorza.

The official explained to Télam that the sustained drop in the international price of oil "was aggravated by the pandemic" and this ended up giving "a hard blow" to the activity.

“Quarantines around the world slowed fuel consumption and companies began to decrease their production; for this reason, the capacities to store crude oil began to be completed,” Solorza analyzed.

Tierra del Fuego transported oil by truck to Chile, but the closure of the borders made this route impossible and "there was no other alternative than to close some oil wells, although those that generate gas remain active," he said, adding that "all the industry is evaluating at this moment how to reconfigure itself to be able to get ahead.”

For his part, the provincial Secretary of Hydrocarbons, Alejandro Aguirre, revealed that a ship that is expected in the producing area of ​​the island plans to transport "between 20 and 25 thousand cubic meters of crude oil."

"This will alleviate the situation of the storage plants, which in the case of the Total company is at 70 percent of their capacity, while YPF and Roch are almost at the top," he said.

He also said that, although "there is no other confirmed ship" for May, there are negotiations for the arrival of a vessel that would transfer about 30 thousand cubic meters, an operation subject to negotiations due to the "constant variations in the price of the barrel."

"Santa Cruz did not lose its ability to produce because the only thing that was changed was the number of working days in the southern basin," said Lionel Gómez, of the Union of Private Petroleum Workers, who explained that the minimum number of personnel is maintained to avoid possible coronavirus infections.

Gómez confirmed that they do not want to "sign the agreement" to keep the jobs with a 40 percent reduction because in practice it is more than 50 percent of the pocket salary and because they have versions "that the price of the barrel next week would go to 45 dollars;" at the same time that he insisted that "Santa Cruz did not lose anything. At most 100 cubic meters in the northern zone, which is approximately three hours of production."